On January 8, 2003, the five Central American countries of Costa Rica, Honduras, El Salvador, Nicaragua and Guatemala together with the United States, announced the launch of negotiations to eliminate tariffs and other barriers to trade.  Actual working-level negotiations began in San Jose, Costa Rica, on January 27, with the goal of completing a new U.S.-Central American Free Trade Agreement (CAFTA) by the week of December 8, 2003.  This objective can be reached through a planned schedule of nine rounds of negotiations, despite foot-dragging in some quarters and the short timeframe to reach a consensus document. 

But what does CAFTA offer for U.S. agriculture in terms of new markets as well as new competition?  The five CAFTA countries have a combined population of 35 million people, which is roughly the population of the state of California.  Guatemala has a population of 13.3 million, with Honduras at 6.6 million, El Salvador at 6.4 million, Nicaragua at 5 million and Costa Rica at 3.8 million.

Unfortunately, the per capita gross domestic product of these countries is at the lower end of the scale.  Costa Rica is the most prosperous of the five countries at $6,700 per capita, followed by El Salvador at $4,000 per capita, Guatemala at $3,700 per capita, Honduras at $2,700 per capita and Nicaragua at $2,500 per capita.  Therefore, these countries together offer U.S. agriculture a sizable consumer market that is currently low on purchasing power.  However, as these countries become more developed they are highly likely to increase their purchases of agriculture commodities with stronger purchasing power. 

Cuba’s Agricultural Market

 Since U.S. agriculture is excited about agricultural trade prospects in Cuba, it makes sense to compare Cuba with the market potential in the CAFTA countries.  Cuba has a population of 11.2 million and a per capita gross domestic product of $2,300 (which makes its one poorest countries in the Western Hemisphere after Haiti).  Meanwhile, CAFTA offers a market with three times the population base. 

The highest value U.S. agricultural exports to Cuba are wheat ($23 million), coarse grains ($23 million), poultry meat ($21 million), soybean oil ($21 million), soybeans ($21 million) and soybean meal ($19 million).  The total value of U.S. agricultural exports to Cuba in 2002 was only $138 million. 

CAFTA Agricultural Market

In comparison, the total value of agricultural, fish and forestry products to the five CAFTA countries in 2002 was $959 million.  Therefore, the CAFTA agriculture market at nearly $1 billion is almost seven times larger than the current agriculture market in Cuba.  Total U.S. exports of agricultural and nonagricultural to the region have grown by 42% since 1996 and totaled $9 billion in 2001, which is near the amount of U.S. exports to Russia, India and Indonesia combined. 

Although there are a number of agricultural disputes to be resolved between the United States and each of the CAFTA countries, none of these issues are insurmountable.  Indeed, the ministers leading the negotiations agreed on a special framework to immediately address sanitary and phytosanitary issues related to agricultural trade.  The special effort has focused on resolving such problems as import bans on U.S. pork, poultry and dairy products.

So what U.S. agricultural commodities have the most to gain and the most to lose from CAFTA?  Of course, the key factor in gaining expanded markets is the reduction of import tariffs into CAFTA countries and the elimination of non-tariff trade barriers.  However, the size of existing export markets is relevant -- listed below are the most valuable U.S. agricultural commodities exported to CAFTA countries, in descending order of market value in 2002:
 

Identified below are the most valuable agricultural imports from the CAFTA countries (excluding bananas and coffee, which are not grown in the United States).  These following commodities presumably compete with U.S. commodities, although it is unlikely that the United States has sufficient shrimp and lobster production to meet its consumer needs:
 

At the CAFTA regional level, sanitary and phytosanitary measures are regulated by the Central American Regulation on Sanitary and Phytosanitary Measures, which has been in force since 1999.  This regulation covers sanitary and phytosanitary measures that could directly or indirectly affect trade among the CAFTA countries, and thus is designed to prevent such measures from becoming unnecessary barriers to trade.

Costa Rica’s Agricultural Market

Costa Rica is a member of the Central American Common Market, which means it agreed to reduce its common external tariff to a maximum of 15% in 1995.  In fact, most tariffs on agricultural commodities range from 1% to 15% ad valorem.   However, certain agricultural commodities are protected by high tariffs.  Most noticeable are poultry product tariffs at 150% and dairy product tariffs at 65%. 

Currently, U.S. agricultural commodities are at a competitive disadvantage with other countries that already have free trade agreements with the Costa Rica.  A case in point is the U.S. apple industry, which is very interested in the Central American market.  However, nearly $4 million in U.S. apples exported to Costa Rica in 2002 paid a 15% import tariff, while Canadian apples enter Costa Rica duty-free. 

In the Uruguay Round negotiations, the Government of Costa Rica agreed to eliminate import permits other than sanitary and phytosanitary permits.  Costa Rica’s Uruguay Round implementing legislation eliminated quantitative restrictions and some requirements on the imports of pork and related by-products, poultry, seeds, rice, wheat, white and yellow corn, beans, sugar cane and related products, dairy products, and coffee.  In many cases, the Uruguay Round negotiations resulted in the import permits being replaced by tariffs. 

Although Costa Rica is attempting to meet its WTO obligations to lower or eliminate tariffs on agricultural imports and not to employ non-tariff import barriers, there have been problems with poultry, rice, potato and onion imports from the United States.  Imports of U.S. poultry were banned in January 2001 when Costa Rica decided to enforce a regulation that requires export plans to be inspected and approved by the Government of Costa Rica.  Costa Rica inspected five U.S. poultry export plants in November 2001 and approved four of these plants to export to Costa Rica in December 2001.

Additionally, the process for obtaining standard sanitary and phytosanitary  documentation has often proved to be cumbersome and lengthy.  Importers of U.S. rice, potatoes and onions have expressed difficulty in gaining entry into Costa Rica for their shipments.  Indeed, there have been allegations that officials of the Costa Rican Ministry of Agriculture have delayed issuance of standard sanitary/phytosanitary documentation to protect its domestic farmers.  Even though shipments have eventually been allowed to enter, the delays have caused lost revenue on these imports.  Moreover, Costa Rican customs procedures remain complex and bureaucratic despite recent laws and improvements, including the establishment of an electronic “one-stop” import and export window, which significantly reduces the time required for customs processing.

All foods and agricultural goods, which are produced in Costa Rica or imported from other countries, are subject to testing and certification by the Ministry of Health before they can be sold in the domestic market.  A system of standards exists, but a lack of adequate laboratory equipment and funds prevents effective controls from being implemented.  Instead, Costa Rica requires that all imported products be certified safe and allowed for sale in the country of origin.

Top Five U.S. Agricultural Exports to Costa Rica in Calendar Year 2002:
 

 Costa Rica has maintained a surplus agricultural product trade balance for the last 11 years.  Its two principal cash crops are bananas and coffee, which are predominantly grown for export.  Costa Rica has been able to diversify its agricultural exports into non-traditional export commodities, such as pineapples, mango, tuna and ornamental plants, which have expanded considerably during the last decade. 

Top Five U.S. Agricultural Imports from Costa Rica in Calendar Year 2002: 
 

El Salvador’s Agricultural Market

El Salvador also is a member of the Central American Common Market, and thus has agreed to implement a common maximum external tariff of 15%.  However, certain agricultural product and clothing imports range from 15% to 40%.  Dairy and meat products are assessed a 40% ad valorem duty, with beef facing a 30% tariff.  Tariffs on new and used finishing cloth are generally 25%. 

Rice and pork are both subject to import quota schemes and 40% duties.  Rice millers are required to buy rice locally and when there is insufficient local supply, the El Salvador’s Ministry of Agriculture operates and import quota system.  Once the rice import quota has been exhausted, rough or milled rice can be freely imported, subject to a 40% duty.  Pork importers face a similar arrangement to first buy locally, then imports, which are subject to a 40% duty.

The Government of El Salvador requires that rice shipments be accompanied by a USDA certificate stating that the rice is free of Tilletia Barclayana to avoid fumigation a the cost of the importer.  Otherwise, sanitary standards have generally not been used as non-tariff barrier to imports, with the notable exception concerning raw poultry. 

According to a U.S. Trade Representative report entitled “2003 National Trade Estimate Report on Foreign Trade Barriers,” which was issued in March:

“Since 1992, the Ministry of Agriculture has imposed arbitrary sanitary measures on U.S. poultry products.  These sanitary restrictions call for zero tolerance or negative laboratory tests for diseases such as aviana denovirus, chicken anemia, and salmonella.  These diseases, common worldwide, are not recognized as list “A” diseases by the International Office of Epizootics.  Given the ubiquitous nature of salmonella throughout the world, it would be difficult for any established poultry-producing country to guarantee zero tolerance or negative lab tests on meat that has not been cooked or irradiated.  The Salvadoran government applies these standards in a discriminatory manner since domestic production is not subject to the same requirements as imports.  As a result of these measures, the United States has been unable to export poultry to El Salvador.  The industry estimates the value of lost U.S. poultry exports at $5 million to $10 million per year.”

Top Five U.S. Agricultural Exports to El Salvador in Calendar Year 2002:
 

The agricultural sector made up nearly 10% of El Salvador’s gross domestic product (GDP) in 2001, and remains an important export sector and source of employment, employing 30% of the labor force.  However, the significance of agriculture has decreased from 1981, when the agricultural sector represented over a third of the country’s GDP. 

Exports experienced rapid growth during the 1990’s, but fell dramatically in 2002 with plummeting coffee prices.  El Salvador’s chief agricultural exports are coffee, sugar and shrimp, and its main export markets are the United States, Guatemala, Honduras, Nicaragua and Costa Rica. 

Top Five U.S. Agricultural Imports from El Salvador in Calendar Year 2002:
 

Guatemala’s Agricultural Market

Guatemala’s tariffs on most products from outside the Central American Common Market are currently within the zero to 15% range.  Exceptions include textile imports with tariffs up to 23% and agricultural commodity imports in excess of any applicable tariff rate quota (TRQ).

Guatemala eliminated it’s annual TRQ and the use of reference prices to calculate tariffs for poultry products in 2001, and began using invoice prices.  However, both procedures could be changed without prior notice, since they are not based on legislation approved by Guatemala’s Congress.

In December 2001, the WTO Committee on Customs Valuation granted Guatemala’s request to retain the use of minimum import values on certain poultry and rice products.  Minimum values for rice products were permitted until May 21, 2003.

According to a USTR report on “Foreign Trade Barriers”:

“Guatemalan law required that food products sold in the domestic market be tested, registered and labeled in Spanish, although stick-on labels are permitted.  Products sold in bulk are exempt from the labeling requirements unless they are sold at the retail level as an individual unit.  The law requires that every size or form of product be registered, even if the product content is of identical composition.  Trained personnel available to carry out this process are in short supply.  The regulation and testing process takes six weeks regardless of the company or product.  Products are sometimes damaged during the process and are susceptible to pilferage while awaiting completion of tests and registration.  Enforcement of product registration and labeling requirements has been irregular but is becoming more consistent.”

Guatemala’s agricultural sector contributes 23% to the country’s GDP and employs 39% of its working population.  The agricultural sector represents about 60% of Guatemala’s exports, which are concentrated on traditional products such as bananas, coffee and sugar. 

Top Five U.S. Agricultural Imports from Guatemala in Calendar Year 2002:
 

Honduras’ Agricultural Market

Honduras is suffering from a long-term agricultural crisis.  Coffee prices were so low in 2002 that over 40% of coffee growers chose not to harvest their crop.  Approximately 100,000 small farmers and another 100,000 seasonal pickers were affected by low coffee prices and a summer drought.  The agriculture crisis has increased bank default rates, leading to costly government bailouts and has increased migration to urban areas within Honduras.  In 2001, the crop losses caused by drought and Hurricane Michelle, the fall in international coffee and palm oil prices, and the downturn in the world economy all contributed to the further weakening of the economy of Honduras.

The agriculture sector is the largest employer in Honduras and is estimated to account for approximately 40% of its work force and is the source of employment for 75% of the rural population.  Hourly wages for agricultural workers are half as much as the average hourly wage for all employment activities in Honduras and are the lowest wages received in Central America.

Honduras implements a price band mechanism on imports of yellow corn, sorghum and corn meal.  This price band is calculated from a time series of international prices on a given product for the prior 60 months.  The 15 highest and lowest monthly prices are eliminated, with the remaining highs and lows establishing the price band.  Imports entering with values within the defined band are assessed a 20% tariff.  Imports entering with prices above the band are assessed duties at a lower rate than 20%, according to a predetermined schedule.  Imports priced below the tariff band are assessed a tariff higher than 20%. 

The Government of Honduras also maintains a seasonal restriction on the price band.  For example, from September to January the minimum allowable duty is 20% for corn and 15% for corn meal and sorghum.  From February to August, duties are allowed to fluctuate according to predetermined duty tables for each commodity.  This seasonal restriction has been added to provide additional protection to local grain farmers during the main harvest season.

The Government of Honduras as well as the country’s farm groups and importers have agreed to a quasi-TRQ where the price band remains in effect until local grain supplies are exhausted, after which a 1% duty is applied to imports.  The United States has strongly opposed the Honduran policies on corn and sorghum as limiting access for U.S. agricultural products.

According to a USTR report entitled “Foreign Trade Barriers”:

“Honduras has maintained a ban on U.S. raw poultry imports for some time.  The U.S. Government estimates that if Honduran restrictions on U.S. raw poultry and poultry parts were lifted, U.S. producers could export an additional $10 million of poultry products to Honduras annually.  The U.S. Embassy received a series of complaints in 2002 from local importers regarding import restrictions, difficult certification requirements and other obstacles to the importation of U.S. pork, poultry and dairy products.  Honduras food safety officials have restricted imports of U.S. chicken and pork products citing sanitary concerns.  Changes in sanitary and phytosanitary requirements are seldom reported to the WTO as required, and create uncertainty among U.S. suppliers and Honduran importers.  The Honduran government requires that sanitary permits be obtained for all imported foodstuffs.” 

Top Five U.S. Agricultural Exports to Honduras in Calendar Year 2002:
 

Natural disasters and weather phenomena (i.e., a major hurricane and el Nino) have plagued Honduras over the last few years.  The agricultural economy also has suffered from low prices for non-traditional commodities, such as shrimp prices, which have seen a decline in price almost equal to that of coffee. 

Top Five U.S. Agricultural Imports from Honduras in Calendar Year 2002:
 

Nicaragua’s Agricultural Market

Agriculture is an important industry in Nicaragua, with agriculture production accounting for 32% of the country’s GDP and 56% of the country’s total exports, while employing roughly 60% of the population.  Nicaragua is very much a developing country, since annual purchasing power per capita is only $2,500, which makes it the poorest consumer base in Latin America.  Indeed, the majority of Nicaragua’s poor depend on agriculture as their sole source of income. 

In 2002, Nicaragua completed a broad package of tariff reductions that were launched in 1997.  This reform was accompanied by the removal of many non-tariff barriers, as well as the elimination of the discretion of government officials to waive the application of tariffs.  The reform package, which is in accordance with the reduction and harmonization of a common external tariff among members of the Central American Common Market, also repealed restrictive laws on foreign agents, representatives and distributors of foreign firms.  More recently, President Enrique Bolanos of Nicaragua said that the CAFTA would have to protect sensitive agricultural sectors in his country that are not ready for trade liberalization. 

Nicaragua imposes regular import duties of 15% on many final consumer goods.  However, a small number of protected agricultural commodities such as rice, corn and chicken parts face special import tariffs.  In the case of rice, import tariffs may be as high as 103.5%.

According to a USTR report entitled “Foreign Trade Barriers”:

“In October 2001, the Nicaraguan Ministry of Health issued a circular requiring food importers to certify that food products had not been genetically modified.  The Ministry of Health subsequently suspended implementation of the circular in order to review the WTO implications of the measure.”

Top Five U.S. Agricultural Exports to Nicaragua in Calendar Year 2002:
 

Top Five U.S. Agricultural Imports from Nicaragua in Calendar Year 2002: 
 

CAFTA Agricultural Trade Issues

The CAFTA countries have made textiles a top priority with market access for agricultural products, such as sugar another major priority for the negotiations.  The CAFTA countries are concerned about the lack of U.S. movement on both textile rules of origin and U.S. duties on its agricultural commodities into the U.S market.

Each of the five Central American countries produce and export sugar, and sugarcane is among the major crops produced in each country.  It is estimated that the sugar industry in the five CAFTA countries account for 350,000 direct jobs and 1.25 million indirect jobs.  All the CAFTA countries rely on exports to absorb a substantial quantity of their sugar production.  The sugar export share of its domestic sugar production ranges from 37% for Honduras to 73% for Guatemala.  Thus, each CAFTA country is likely to insist that sugar trade with the United States be liberalized.  Consequently, if the United States wished for the FTA to benefit the CAFTA countries, it is difficult to see how such an agreement could avoid dealing with sugar. 

Of course, the CAFTA countries have sensitive agricultural sectors as well, such as pork, poultry and dairy.  Generally, the response of U.S. agricultural groups to CAFTA negotiations has been largely positive and very similar to their response to the Free Trade Area of the Americas (FTAA) negotiations.  Like the FTAA, U.S. agricultural organizations have expressed some definite reservations.

The National Pork Producers Council (NPPC) and the National Cattlemen’s Beef Association (NCBA) have expressed concerns about two major issues:  tariff rates and meat inspection.  In comments submitted to USTR, NPPC states:  “Under the U.S.-Central American Free Trade Agreement, all tariffs on U.S. pork and pork products should immediately be zero.  There should be no tariff-rate-quotas and no phase-in period for obligations.”  NCBA points out that El Salvador and Honduras have tariff rates of 30% and 15%, respectively, on beef.  Both organizations have expressed the opinion that tariffs should be at the forefront of the negotiations. 

Also important to U.S. livestock producers is the position of the CAFTA countries on meat inspection.  Both NPPC and NCBA have pointed out that many Central American countries require their own inspection of processing facilities in the United States before accepting U.S. pork or beef.

U.S. CAFTA Proposal for Agriculture

The United States has tabled a CAFTA proposal for agriculture that would eliminate tariffs for one group of commodities immediately, with a second group subject to a five-year phase out, a third group subject to a ten-year phase out, and a fourth group for the most import sensitive products to be phased out over a still to be determined period.  The United States also is seeking to have tariff elimination begin from applied levels rather than bound tariff rates. 

CAFTA Labor Issues

The labor chapter text in the CAFTA may be the most contentious item facing trade negotiators.  Some House and Senate Democrats have characterized the U.S. proposal for the labor provisions of the CAFTA as inadequate.  In a May 14, 2002, letter to U.S. Trade Representative Robert Zoellick, House Democratic Leader Nancy Pelosi (D-CA) and six others Democrats argued that the U.S. proposal should be changed to reflect commitments that CAFTA countries adopt and enforce laws consistent with recognized labor standards.  Specifically, the letter states that the labor regimes in the CAFTA countries “do not embody the five internationally-recognized core labor standards, particularly with respect to freedom of association and the right to organize and bargain collectively.”  Additionally, the letter charges that there “is no history of adequate or consistent enforcement” of existing labor laws in the CAFTA countries, and “indeed, the record is often one of willful disregard.”

On May 8, 2003, four Senate Democrats, led by Sen. Max Baucus (D-MT) sent a letter to the USTR insisting that Congress view the labor rights report mandated by the provisions of the Trade Promotion Authority legislation.  The letter notes:  “As with market access and other provisions of free trade agreements, we believe that labor provisions should be tailored to address issues particular to each trading partner.  One size does not fit all.”  Clearly, there is concern about international monitoring of labor rights in CAFTA countries and efforts to bring the labor laws in these countries into compliance with internationally recognized standards. 

Conclusions

The CAFTA will ultimately provide U.S. farmers with expanded export markets and reinforce free-market reforms in the region.  U.S. trade negotiators are seeking the elimination of high tariffs on U.S. agricultural commodities and the implementation of food inspection rules that are based on sound science.  Since the United States and the five CAFTA countries have already scheduled a concluding meeting in Washington, D.C. on December 8, it is critical that U.S. agricultural interests focus on these negotiations.

It may be more exciting and exotic to speculate about the opening of the Cuban market to U.S. agricultural exports and the eventual demise of Fidel Castro’s regime at some point in the future, but the real action is the CAFTA.  Recent trade disputes with our NAFTA trading partners show us that trade agreements are never a panacea nor is it always easy to translate market access concessions contained in trade agreements into practice.  However, the alternative of sitting idling by while Canada, Chile and other competitors make deals with CAFTA countries and other countries throughout the world is not in the long-term interest of a very productive U.S. agriculture base. 

Last year’s drought was a catalyst for the worse fire season in modern history.  The United States Department of Agriculture (USDA) reports more than 7.2 million acres burned, thousands of homes and buildings were destroyed and 21 firefighters were lost during wildfires in 2002.  The heavy winter snows and damp springs in the East and Southeast have reduced the risk of wildfires this year in these areas.  However, the West has remained a tinderbox, with many areas still suffering extreme drought conditions.  The “Healthy Forest Initiative” (HFI) advanced by the Bush Administration, which is to be implemented by the Department of Interior agencies and USDA’s Forest Service, is designed to initiate landmark changes to deter wildfire outbreaks.  The HFI includes administrative reforms and calls for legislation as a long- term solution. 

The following administrative reforms are being implemented in response to the HFI: 

• Establishing new procedures under the National Environmental Policy Act (NEPA) that will allow projects for forest thinning, reseeding and planting to proceed more quickly;
• Amend agencies’ administrative appeals process to expedite appeals of proposed forest projects;
• Expedited consultation by federal agencies on the impacts the forest thinning projects may have on endangered species; and 
• Implementing the Council on Environmental Quality guidance intended to establish an improved process for conducting environmental assessments.

The recent blaze on Mount Lemmon, in Arizona, which has charred more than 11,000 acres and destroyed over 200 homes, re-ignited the call for Congress to complete its work on the Healthy Forests Restoration Act (H.R.1904).  137 House members, including 17 Democrats cosponsored the bill.  On May 20, the bill passed the House (256-170) and was referred to the Senate Agriculture, Nutrition and Forestry Committee.  The Senate committee has held its first hearing on the matter, but it is not known when committee action will be completed and considered by the full Senate. 

Supporters Say

Opponents Contend

Highlights of HR 1904 

 The bill grants authority to the Secretary of Agriculture for lands under the National Forest System and to the Secretary of the Interior with respect to public lands administered by the Bureau of Land Management.  Therefore, references to the “Secretary” in the bill refer to the Secretary who has jurisdiction over the federal land at issue.
 

• Forest Thinning (Title I Section 102) – Forest thinning is the removal of vegetation deemed hazardous, which could cause wildfires or spread disease or insect infestation.  The bill gives discretion to the Secretary to authorize plans for forest thinning on federal lands.   The bill directs that priority be given to projects that protect communities, watersheds, high-risk land that serves as habitat for endangered species or is susceptible to insect infestation.   The bill imposes a 20 million acre overall cap on the amount of land in forest thinning projects.  Furthermore, the bill prohibits the construction of new roads to complete the thinning projects in designated roadless areas.
• Administrative Review (Title I Section 105)  - Directs the Secretary of Agriculture to establish an administrative review process, within 90 days of enactment of the Act, to provide an avenue for private citizens to challenge a specific forest thinning project. 
• Judicial Review (Title I Section 106) – Requires any suit against a forest thinning project to be filed within 15 days of notice of final agency action.  It limits any preliminary court injunction to 45 days; subject to court approval the injunction could be renewed.  In addition, courts would be required to render a final determination within 100 days of when the complaint or appeal is filed.
• Biomass Grants (Title II Section 203) – Authorizes $25 million for each of the fiscal years 2004 through 2008 for grants to any person who owns or operates a facility that uses biomass and establishes a value-added grant program to offset costs of projects to add value to biomass.
• Watershed Assistance (Title III – Section 302) – Authorizes the Forest Service to provide technical, financial, and related assistance to states with watershed projects on non-federal forested land.  $15million in each fiscal year (2004 through 2008) is authorized for this provision and mandates that 75% of the funds go to the cost-share program with 25% for technical assistance.
• Insect Infestation Assessment and Treatment (Title IV Section 402)  - Directs the Forest Service and U.S. Geological Survey to conduct an accelerated program to improve forest health and reduce infestations. 
• Exemption from National Environmental Policy Act (NEPA) (Title IV Section 403) – The bill authorizes the Secretary of Agriculture to permit research known as “applied silvicultural assessments” on federal lands, if the lands are determined to be at risk to infestation of certain pests.  The “applied silvicultural assessments” would be exempt from the requirements of National Environmental Policy Act (NEPA); which means the Forest Service would not have to determine if the assessment would have a significant effect on the environment.  An assessment area would be limited to 1,000 acres per assessment and 250,000 acres in total. 
• Establishment of Health Forests Reserve Program (Title V- Section 501 and 502) - Directs the Forest Service in cooperation with the U.S. Fish and Wildlife Service to establish a Healthy Forest Reserve Program (HFRP).   Under the HFRP up to one million acres of privately owned forests could be set aside under three provisions: a 10-year cost –share agreement, a 30- year easement or a permanent easement with a buyback option.

The Congressional Budget Office estimates that if Congress fully appropriates all provisions of the bill, outlays for FY2004 would be $12 million and $278 million for the period of FY2004 through FY2008.  Congressional appropriators are presently building the spending bills for FY2004.  Other than military construction, USDA took the largest dollar reduction of any agency under the FY2004 budget allocation.  Therefore, it may not be possible to fund all provisions of the HR 1904 in FY2004. 

On June 17, the Commission on the Application of Payment Limitations conducted a hearing or “workshop” to hear testimony from invited witnesses, as well as public comments.  It heard all of the expected arguments for and against tighter limitations, but also heard some new perspectives.

The issue of payment limitations has been around as long as the government has been involved in making large direct payments to farmers.  In the 1970s, press critics of farm programs frequently cited the fact Senator James Eastland (D-MS), a senior member of the Senate Agriculture committee, received large payments for his cotton farm in Mississippi. 

Historically, Congressional farm state supporters of farm payments have used preservation of the family farm and preferably the “small” family farm as the primary justification for spending billion of taxpayers’ dollars on farm programs.  However, there has been a growing trend toward farm concentration over the past few decades.  Increasingly the only “family farms” that are surviving are those large enough to qualify for large payments, if these farms produce price supported commodities.  Interestingly enough, the trend toward consolidation has been even more pronounced in the livestock and poultry sector, where farmers receive no direct government payments.

In any event, the debate on payment limitations heated up during consideration of the 2002 farm bill.  In fact, the farm bill passed by the Senate did significantly tighten payment limitations.  This was due in part to the publicity generated by the Environmental Working Group’s release of farm payments for every farmer in the United States.  In the Conference between the House and Senate, the Conferees provided for the appointment of a “Commission on the Application of Payment Limitations in Agriculture.”  It was given the duty to conduct a study on “the potential impacts of further payment limitations on the receipt of direct payments, counter-cyclical payments, and marketing loan gains and loan deficiency payments on –

(1) farm income;
(2) land values;
(3) rural communities;
(4) agribusiness infrastructures;
(5) planting decisions of producers affected; and
(6) supply and prices of covered commodities, loan commodities, specialty crops (including fruits and vegetables), and other agricultural commodities.

Other Commission members are Gary Black of the Georgia Agribusiness Council, Allie Divine of the Kansas Livestock Association, Gary Dyer of Farm Credit Services in Arizona, Terry Ferguson, a producer from Illinois, Neil Harl, Professor of Economics at Iowa State University, Ellen Lindeiman, a producer from North Dakota, Edward Smith from Texas A&M, and William Spight, a producer from Mississippi. 

Cotton and Rice Strongly Oppose Limitations

The Commission heard strong opposition to tighter payment limitations from representatives of cotton and rice producers.  Dr. Mark Lange, President of the National Cotton Council stated that the imposition of lower payment limitations would destabilize rural economies and negatively impact our ability to compete globally.  It would amount to our unilaterally disarming in global trade competition.  Moreover, he said there was no conclusive evidence that government payments contributed to larger farm sizes.

Lange made the case for continued use of generic commodity certificates.  He also said that 2-3 million acres would be shifted out of cotton with stricter payment limits.  He pointed out that in the mid-south a farmer with 800 acres of cotton hits the current limits, and it takes 1,200 acres of cotton to cash flow a four-row cotton picker.

David Stanford, Vice President of Plains Cotton Cooperative said that tighter limitations would

(1) create market disruption;
(2) hurt forward contracting; and
(3) make it more difficult for producers to obtain financing.

The $30,000 Proposal

The Commission got the opposite view form Roger Johnson, the Commissioner of Agriculture of North Dakota.  Johnson wants to have only one payment per individual and count commodity certificates and marketing loan gains in that limitation.  Johnson contends that we cannot have government farm payments substantially above median household income, which he said was about $30,000 annually in North Dakota. 

FAPRI Analysis

The Commission was provided with some helpful economic analysis by economists Dr. Patrick Westhoff of the University of Missouri and Dr. James Richardson of Texas A&M University.  Westhoff presented the analysis of the Food and Agricultural Policy Research Institute (FAPRI).  Westhoff testified that strict payment limits would reduce the national area planted to cotton by a half million acres and rice by 250,000 acres.

Westhoff also testified that imposing tighter payment limits would both reduce government costs and reduce payments to producers by about $430 million annually.

For the purposes of his study, Westhoff assumed limits of $40,000 in direct payments, $60,000 in counter-cyclical payments, and $175,000 in marketing loan benefits per farm application.  This should be compared with current law, which has a limitation of $40,000 for direct payments, $65,000 for counter-cyclical payments, and $75,000 for marketing loan benefits.  However, the current law contains a “three entity rule” which allows farmers to be involved in as many as three entities and receive as much as twice the amounts spelled out in the law.  In addition, it permits the use of marketing certificates, which are not subject to limitations.

Westhoff’s report estimated that 44 percent of rice farms and 23 percent of cotton farms would have payments limited if they did not change their operations to adjust to assumed limits.  These producers account for 77 percent of the rice and 62 percent of the cotton grown in the United States. 

In contrast, Westhoff said only about 2 percent of corn and soybean farms would face payment limits.  These farms account for 14 percent of U.S. production.

Commentary from the Economists

There were interesting comments by Dr. Daryll Ray of the University of Tennessee, Dr. Daniel Sumner of the University of California and Dr. Bruce Gardner of the University of Maryland.  All of these gentlemen are distinguished agricultural economists whose views are respected in farm policy circles.

Dr. Ray points out that our expectation of export expansion during consideration of the 1996 “Freedom to Farm” bill have not been met.  Instead we are faced with excess production capacity worldwide.  Technology expands output faster than population.  He said that timely self-correction does not take place in agriculture; farmers tend to produce on all their acreage.

Ray said tighter limits would mean less acreage in cotton and rice and more acres of soybeans, corn and wheat.  Prices would increase for cotton and rice and decrease for wheat and feed grains. 

The real beneficiaries, Ray said, would be the users of grain and soybean meal, as those prices would go down.  He also said that farm consolidation would slow, and there would be downward pressure on land prices and cash rent.  However, he said that tighter limitations would hasten consolidation in the livestock industry.

Dr. Daniel Sumner pointed out that if you only looked at median annual income as suggested by Mr. Johnson, you wouldn’t transfer any payments at all to farmers.  A result of the stricter limitations would be more part-time farmers and less full-time farmers.  Also, tighter limits would drive down some specialty crop prices. 

Sumner pointed out other unintentional effects of tighter limitations.  He said that in general, limits would make cost of production higher and U.S. agriculture would be less competitive in world markets.

Bruce Gardener, former chief economist of USDA, did not have a statement, but attempted to help summarize what others had presented.  In general, he seemed to agree with Sumner that with stricter limitations you would lose competitiveness with very uncertain effects on rural communities. 

All three economists, Ray, Sumner and Gardner, agreed that tighter limitations would depress the prices of corn, wheat and soybeans, as well as the prices of specialty crops.

On the matter of global competition, there was agreement between witnesses for cotton and rice and the economists that tighter payment limitations would make it harder for U.S. farmers to compete in global markets.

What’s Next

It is not known when the Commission will make its final report, and there is no indication what the Commission’s recommendations will be.  It is hoped that it will produce a document that will be helpful the next time Congress debates payment limitations.

Americans are famous for not sticking to diets.  When Mark Twain said he had no patience for anyone who couldn’t quit smoking, since he himself had quit 12 times, he might as easily have been talking about weight loss.

On the other hand, the growing girth of Americans is increasingly a topic of public policy debate, and even litigation.  Statistics on obesity and overweight (two conditions that are distinct in degree if not in kind) tell a troubling tale.  In 2001, the U.S. Surgeon General wrote:  “[O]besity has been increasing in every State in the Nation … 34 percent of U.S. adults … are overweight … and an additional 27 percent are obese … This contrasts with the late 1970s, when an estimated 32 percent of adults … were overweight, and 15 percent were obese.” 

Perhaps even more troubling, overweight and obesity are on the rise among children.  The Surgeon General’s call to action noted that “13 percent of children aged 6 to 11 years and 14 percent of adolescents aged 12 to 19 are overweight.  During the past two decades the percentage of children who are overweight has nearly doubled (from 7 to 13 percent), and the percentage of adolescents who are overweight has almost tripled (from 5 to 14 percent).”   Medical problems such as a growing incidence of Type II diabetes among children have been linked to increased prevalence of obesity. 

There appears to be almost universal agreement that America is bulking up for a variety of reasons, by no means all diet-related.  More people have sedentary jobs; long urban and suburban commutes decrease the time available for sports and exercise.  Among children, both television use and, more recently, the popularity of the Internet are thought to have crowded out physical activity, while physical education and recess have been cut back or even eliminated at many schools.  Meanwhile, security and safety concerns along with changing residential patterns have reduced the opportunities for children to walk to school, and in some neighborhoods something as simple as playing outside is not always a safe activity.

Still, few analyses of overweight and obesity patterns would leave out diet as a factor.  If physical activity explains how many calories we burn, diet tells how many calories we take in.  And it is in matters of diet that personal health intersects most visibly with public nutrition policy.

This intersection of the personal and the political will be vividly illustrated in the next two years as two different federal departments revamp documents that constitute the core of government nutrition advice:  the Dietary Guidelines for Americans and the Food Guide Pyramid.

A Tradition of Dietary Advice

The federal government has a long history of giving people advice about what to eat.  The advice, the science on which it is based, and the problems it seeks to address have all changed over the years.  Even in the late 19th century, the U.S. Department of Agriculture was sponsoring research on “the relationship between agriculture and human nutrition,” and disseminating advice.  By 1917, USDA issued its first set of dietary recommendations – a booklet called How to Select Foods. 

In earlier decades, the government’s concerns were sometimes undernourishment rather than its opposite.  (The malnutrition of many World War II draftees is often cited as one factor behind the creation of the National School Lunch Program in the postwar period.)  In more recent decades, federal advice has increasingly focused on the ill effects of consuming too much – either too much food in total, or excessive amounts of certain types of foods.

Every five years since 1980, the U.S. Department of Agriculture and the U.S. Department of Health and Human Services have jointly published a set of recommendations called Dietary Guidelines for Americans.  The departments describe the Guidelines as “the basis for Federal nutrition policy and nutrition education.” 

In 1992, USDA published the Food Guide Pyramid as a way of more effectively communicating the Dietary Guidelines to the general public.  Highly controversial at the time, the Pyramid has since found a measure of acceptance as a means of simplifying complex dietary advice.   It is widely recognized though not closely followed, and – as we will discuss below – has been increasingly criticized in the last few years by some academics and others.

The Significance of the Guidelines and the Pyramid

Since Americans do not seem to follow nutritional advice closely, one could wonder why the Guidelines and the Pyramid receive such scrutiny – from nutrition activists, food industry trade associations, commodity group lobbyists and others.  If people are not going to follow the advice anyway, does it really matter what the advice is? 

This is of course a debatable question, but one can make a good argument that it does matter, particularly in the longer term, to activists and industry alike.

• Some federal programs are directly tied to the Guidelines.  Most notably, the school meal programs are required by statute to be “consistent with the goals of the most recent Dietary Guidelines for Americans …”  Therefore, as the Guidelines change, the mix of commodities purchased for the school meal programs – which feed about 27 million students each day – may also change.
• Many other federal programs that are not linked to the Guidelines directly may nonetheless be influenced by them.  For example, USDA’s nutrition agencies have placed increasing stress on fruit and vegetable consumption in recent years, reflecting in part the heavy emphasis on fruits and vegetables in most dietary advice.  In some cases, USDA’s emphasis on these products has been the result of direct Congressional mandates, such as an apparently successful pilot program to place fresh fruits and vegetables in school classrooms. 
• In the past year, food has become the subject of more frequent litigation, sometimes with obese children as plaintiffs.  Though generally unsuccessful so far, the litigation has heightened the food industry’s sensitivity to issues of diet and who is responsible for people’s food choices.  In this context, official government dietary advice becomes highly relevant. 
• Food companies have historically responded, at least to some extent, to public concerns about food composition.  When fat and cholesterol were the villains of the American diet, many companies brought new “low-fat” and “lite” foods to market.  Now, some of these foods are under scrutiny in their turn, as attention shifts to sugars and other carbohydrates.  Hence, changes in dietary guidance could have at least an indirect bearing on which new products are introduced and how existing products fare.

The Relationship Between the Guidelines and the Pyramid

The Dietary Guidelines for Americans comprise a set of recommendations.  The Pyramid is a communications tool that translates some of those recommendations, but not all, into graphic form.  The 2000 Guidelines are as follows:

1. Aim for a healthy weight.
2. Be physically active each day.
3. Let the Pyramid guide your food choices.
4. Choose a variety of grains daily, especially whole grains.
5. Choose a variety of fruits and vegetables daily.
6. Keep food safe to eat.
7. Choose a diet that is low in saturated fat and cholesterol and moderate in total fat.
8. Choose beverages and foods to moderate your intake of sugars.
9. Choose and prepare foods with less salt.
10. If you drink alcoholic beverages, do so in moderation.

The Guidelines, though “dietary,” go beyond pure food and beverage intake recommendations:  Guideline 2 deals with exercise rather than diet, while the text discussion of Guideline 1 mentions physical activity as well as food.  The 10 Guidelines are grouped into three descriptive categories:  Guidelines 1-2 under “Aim for Fitness …”, Guidelines 3-6 under “Build a Healthy Base …”, and Guidelines 7-10 under “Choose Sensibly …”  The names of the categories also tend to suggest that a healthy diet should be accompanied by physical activity.

By contrast, the Food Guide Pyramid is more narrowly focused on how much to eat from which food groups.  The Pyramid provides a suggested range of servings for each group.  (The ranges are taken directly from the Dietary Guidelines booklet.)  In addition, the Pyramid uses symbols for fats and added sugars to illustrate their prevalence in each food group.  The food groups and recommended daily servings are as follows:
 

Bread, Cereal, Rice, & Pasta Group	6-11 servings
Vegetable Group	3-5 servings
Fruit Group	2-4 servings
Milk, Yogurt, & Cheese Group	2-3 servings
Meat, Poultry, Fish, Dry Beans, Eggs, & Nuts Group	2-3 servings
Fats, Oils, & Sweets	Use sparingly

USDA describes the Pyramid this way:  “The Pyramid is an outline of what to eat each day.  It’s not a rigid prescription, but a general guide that lets you choose a healthful diet that’s right for you.” 

The current Food Guide Pyramid pre-dates the most recent (2000) edition of the Dietary Guidelines, although the serving ranges given on the Pyramid remain consistent with those in the 2000 Guidelines.  In addition to being several years old, the Pyramid has come under growing criticism from some nutrition professionals and advocates, who in some cases have suggested alternative Pyramids, e.g., one reflecting the so-called “Mediterranean diet” with more emphasis on fruits, vegetables, fish and monounsaturated fats.  Others, though, believe the Pyramid remains basically sound.  Thus, the January 2003 issue of the widely-read magazine Scientific American featured an article entitled “Rebuilding the Food Pyramid” by two Harvard professors who are outspoken critics of the present Pyramid, and may have left the impression among some readers that the authors’ suggested  Pyramid revisions were matters of broad consensus, whereas within the nutrition profession the debate about how best to communicate dietary guidance (and precisely what guidance to communicate) remains a vigorously debated issue.

The Pyramid is controversial for several reasons, among them that …

• Studies have shown that most Americans do not follow the Pyramid’s recommendations, raising the question whether there is a more effective way to communicate dietary guidance;
• The Pyramid may not include all relevant advice, especially the results of more recent research, e.g., the potential health benefits of moderate alcohol consumption;
• The Pyramid, in the view of some critics, does not take into sufficient account the multicultural nature of the United States in the 21st century, and should better reflect the varying dietary preferences of major ethnic groups;
• The nature of dietary advice changes over time as science changes, with the result that consumers may be confused about basic messages:  Is fat still as much a problem as they were told earlier?  Are carbohydrates, rather than fat, to blame for obesity?  Are whole grains good and processed grains bad? 
• Privately-designed dietary regimens – notably the Atkins Diet – that gain credence in the popular press may seem inconsistent with the Pyramid, calling into question the value of government dietary advice in the minds of some consumers.

Statutory Requirements and the Coming Revisions

The National Nutrition Monitoring and Related Research Act of 1990 requires the Secretaries of Agriculture and Health and Human Services to publish a report entitled “Dietary Guidelines for Americans” every five years.  The statute requires that the Guidelines “contain nutritional and dietary information and guidelines for the general public” and also requires that any federal agency carrying out a “food, nutrition, or health program” must use the Guidelines. 

Since the last revision of the Guidelines was in 2000, the next one is due in 2005.  As has been past practice, USDA and HHS intend to appoint an advisory committee to gather data and make recommendations on the revisions.  The Dietary Guidelines Advisory Committee (DGAC) is to consist of “prominent experts in nutrition and health,” and the two Departments asked for nominations from the public in a May 15 Federal Register notice.  These were due June 16, and although the committee is expected to be named soon, it had not been as this issue of the Agricultural Law Letter went to press.  The Departments said they wanted nominees with expertise in, among other fields –

• Cardiovascular disease;
• Cancer;
• Pediatrics;
• Gerontology;
• Epidemiology;
• General medicine;
• Overweight and obesity;
• Physical activity;
• Public health;
• Nutrition;
• Biochemistry and physiology;
• Nutrient bioavailability;
• Nutrition education; and
• Food safety and technology. 

It appears that the Pyramid will be revised on a schedule that will result in both new Guidelines and a new Pyramid being presented to the public in early 2005.  The Dietary Guidelines will be released jointly by USDA and HHS, but the Pyramid is USDA’s sole responsibility and will be released by that Department’s Center for Nutrition Policy and Promotion (CNPP). 

Presumably, this parallel approach will permit the DGAC to comment on the Pyramid, and also permit the officials in charge of Pyramid revision to assimilate the ongoing work of the advisory committee on the Guidelines.  The approach also may help convey the impression that the Pyramid is up to date with the most recent scientific consensus on dietary advice, rather than being based on old advice.

Final release of the two documents will not occur until after the 2004 election.  This timing may seem politically convenient for the incumbent Administration, but it is actually a function of the statutory requirement to update the Guidelines every five years and the fact that the last revision occurred in 2000. 

However, anyone who might want to discuss the Guidelines during the election season will probably have an opportunity to do so.  It is true that they will not become final until 2005, but if the advisory committee is on schedule, its recommendations will become known during 2004 and will probably be published for public comment.  The recommendations will convey a good idea of the final report, though the advisory committee’s recommendations are not always followed precisely.  (For example, in 2000 the advisory committee recommended that Americans be advised to “Choose beverages and foods that limit your intake of sugars.”   The actual 2000 DGL, however, says, “Choose beverages and foods to moderate your intake of sugars.”  The change reflected intense debate over “added sugars” and what to say about them – a debate that may be repeated this time around.)

Next Steps

Two noteworthy events are likely in the next few months.  First, USDA and HHS will appoint the members of the Dietary Guidelines Advisory Committee.  The appointments will be closely scrutinized:  Which members are viewed as “pro-industry” or “anti-industry”?  Are there advocates of the Atkins Diet?  of alternate Pyramids like the one published in Scientific American?  From the committee’s composition, interested parties will try to divine the likely direction of future guidelines.

In late summer, CNPP is expected to publish scientific data in preparation for revising the Pyramid.  The agency probably will not offer specific options for changing the Pyramid, but the nature of the data may point in certain directions.  Again, the outside specialists will be reading the tea leaves, trying to predict (and affect) CNPP’s next moves.

And once the Advisory Committee is constituted, it will probably hold a series of public meetings.  The larger public debate over obesity should ensure that these meetings will be well attended – and their eventual output, the recommendations for new Dietary Guidelines, will be among the major public events of the next two years in the agriculture and food communities.

In February, we discussed in detail FDA’s proposed regulations to implement the registration and prior notice provisions of the Bioterrorism Act (See Feb., 2003 Issue [provide link to Feb Law Letter article])  In that article, we mentioned that proposed rules regarding maintenance of records would be forthcoming.

 On May 6, FDA issued the final two proposed regulations required by the Bioterrorism Act.  One of these proposed regulations deals with establishing and maintaining records, the other with administrative detention of foods that may pose a public health risk.  This article will follow the same approach used in discussing the previous proposals, outlining the details of each proposed rule and discussing some concerns that will arise. 

Establishment and Maintenance of Records

 The Bioterrorism Act provides that FDA may, by regulation, require establishment and maintenance of records by persons who manufacture, process, pack, transport, distribute, receive, hold, or import food.  The records must identify immediate previous sources and immediate subsequent recipients of food.  The Act permits FDA to require retention of such records for up to two years.

Application and Exemptions

 The applicability of these regulations is very similar to that in the registration provisions.  The proposed regulations state that “domestic persons who manufacture, process, pack, transport, distribute, receive, hold, or import food intended for consumption in the United States” are subject to these regulations.  As with previous regulations, the term “food” includes both food intended for human consumption and food intended for animal consumption.

 Also like the registration provisions, “farms” are exempted from the recordkeeping provisions.  The definition of the term “farm” used in the recordkeeping proposal is the exact same as the definition used in the registration proposal.  Our February article discussed some of the difficulties that could arise as a result of this ambiguity.  Those same difficulties would certainly be applicable here. 

These regulations also provide an exemption for small retail establishments.  To qualify, the establishment would have to have 10 or fewer employees and sell unprocessed food grown on that farm or another farm “located in the same general physical location.”   Restaurants, certain fishing vessels, entities subject to exclusive USDA jurisdiction, and foreign facilities are also exempt.  Finally, FDA is considering allowing at least a partial exemption for pet food that is not already subject to BSE regulations.

One part of the applicability if this proposed regulation, at least, does seem to provide more clarity than was provided in the registration provisions.  FDA has provided that records need only be kept regarding activities to which these regulations apply.  For example, the preamble to the registration regulations discussed a farm that grows oranges and then processes them into orange juice for sale to a distributor.  Such a facility would be required to register.  In the recordkeeping context, however, if this facility employed 10 or fewer employees, it would be required to keep records only on the sale of the processed orange juice.  It would not be required to keep records regarding the sale of unprocessed oranges grown on that farm. 

In this context, the regulations are certainly no less complex, but they are less ambiguous than the registration provisions.  What is no less ambiguous in these regulations is the applicability of the farm exclusion. 

Required Information

The information required to be kept will doubtlessly be burdensome on many, but the requirements are at least straight forward.  Records must include the name, address, phone number, and other available contact information for the immediate previous source and immediate subsequent recipient of all food.  Additionally, the records must include a description of the food, date received and/or released, an identification number, the quantity, the method of packaging, and the name and contact information of the transporter who either brought the food in or took it out.  If this information is available in records already kept by the entity, duplication is not required – only availability within the requirements of the rule.

Those involved in the transportation of food are subject to further requirements.  For each item of food transported, a transporter must maintain a record of name and contact information for the source and destination as well as a description of the type of food, an identification number, the quantity, and the method of packaging. 

Recipes, financial data, pricing data, personnel data, research data, and sales data (other than shipment data regarding sales) are specifically excluded from the record-keeping requirements.

Retention and Availability Requirements

For all perishable foods not intended to be processed into nonperishable foods and all animal food, records must be maintained for one year.  Records for all other types of food (basically, nonperishable food for human consumption), must be kept for two years.

The regulations require that the records be kept in such a manner that they may be made available within four hours of a request from FDA, if the request is made between 8 a.m. and 6 p.m. Monday through Friday, or within eight hours if the request is made at any other time.

Effective Dates

The Bioterrorism Act requires that a final rule on this subject be filed by December 12, 2003.  These regulations will become effective six months after publication of the final rule.  Small businesses employing more than 10 but less than 500 employees will be required to comply within 12 months, and businesses with fewer than 10 full time equivalent employees will have 18 months to comply.

The great risk with this proposed regulation, as it is with the registration provisions, is the risk of inadvertent noncompliance.  As with the registration provisions the “farm” exemption is highly ambiguous.  Any person who engages in one of the covered activities and is not covered by a more specific exemption (for example, someone who employs less than 10 people and sells only unprocessed, perishable food grown on site is clearly exempt) may decide to comply with these regulations “just to be safe.”  In many cases, the information required is of the nature already kept in the ordinary course of business, and retention would not be a great burden.  The great burden may fall, however, on the small operator who is unaware that he has ventured outside the “farm” exemption (or, perhaps, is unaware of these regulations all together), does not normally retain records in this detail, and is suddenly confronted by an FDA official demanding them.  The possibility of this happening may be remote, but given the ambiguities in the application of these regulations, it is certainly not far-fetched. 

Detention of Food

The proposed regulations on administrative detention of food are much more straight forward.  At the same time, the Bioterrorism Act and the proposed regulations give a great deal of authority to FDA in this arena.

The Act allows for an authorized FDA employee to order the detention of any food item that is deemed to “present a threat of serious adverse health consequences or death to humans or animals.”  The proposed regulations provide that FDA may require the detention of such food for up to 30 days.  Additionally, any detained food will be marked by FDA with a label indicating that the food has been detained and the reason for detainment.  The food can be released from detainment only either by written order or expiration of the 30-day period.

The proposed regulations also spell out an appeals process.  This process requires that the entire appeal process be completed and final agency action be handed down in no more than 18 days.  An expedited process is provided for perishable food.

Unlike the registration and record-keeping provisions, there is only one exception to the detention provision.  Only food regulated exclusively by USDA is excluded from the possibility of FDA detention.

As previously mentioned, the Bioterrorism Act requires that these regulations be published in final form by December 12, 2003.  FDA is accepting comments on these proposals until July 8, 2003, and because of the impending deadline, FDA has indicated that it will not be able to extend the comment period. 

These two sets of proposed regulations represent the final pieces of implementation of the Bioterrorism Act.  The Act is certainly noble in purpose, and many of its provisions can potentially provide a great improvement to food safety in this country.  Unfortunately, the Act and its implementing regulations have been drafted in such a way that creates a great potential burden on the very people it seems the Act intended to exempt – those on the very basic level of production agriculture.

Randy Green is the firm’s senior government relations representative.  Before coming to McLeod, Watkinson & Miller, he was chief of staff for the Senate Committee on Agriculture, Nutrition and Forestry, and served during 1992 as deputy under secretary of Agriculture for international affairs and commodity programs. 

Elizabeth Haws is an attorney with the firm and is the Manager and Counsel for the American Association of Crop Insurers.  Prior to joining McLeod, Watkinson & Miller, she was the General Counsel and Director of Government Relations for the National Grain Trade Council.  In 1992 she was Counsel and Legislative Assistant for Congressman Fred Grandy for agriculture and trade issues. 

Richard Pasco is an attorney in the firm specializing in legislative, agricultural, food safety, and trade law.

Scott Heselmeyer is a recent graduate of Georgetown University Law Center and is currently affiliated with the firm.